4 variance analysis, fill in the blanks. Rozema Inc., produces chemicals for lar

Question

4 variance analysis, fill in the blanks. Rozema Inc., produces chemicals for large biotech companies. It has the following data for manufacturing ovehead costs during August 2015

Actual costs incurred: Variable $31,000--Fixed $18,000

Costs allocated to products: Variable $33,000--Fixed $14,600

Flexible budget: Variable $________--Fixed $13,400

Actual input X budgeted rate: Variable $30,800--Fixed ____________

Use F for favorable and U for unfavorable

(1) Spending variance: Variable $________ --Fixed $__________

(2) Efficiency variance: Variable ________--Fixed_____________

(3) Production-volume variance: Variable_______--Fixed _________

(4) Flexible-budgeted variance: Variable _______--Fixed_________

(5) Underallocated (overallocated) manufacturing overhead: Variable _____--Fixed _______

Questions: I need help on:

How to calculate the actual rate for VMO?

How to calculate the budgeted rate for FMO?

Explain: Why the variances are favorable or unfavorable?

Thank you

Explanation / Answer

1

Calculation of actual rate for Variable Manufacturing Overhead (VMO):

Actual rate for VMO = Total Actual Variable Overhead / Actual Units Produced

2

Calculation of budgeted rate for Fixed Manufacturing Overhead (FMO):

Budgeted rate for FMO = Total Budgeted Fixed Overhead / Budgeted Units Produced

3

Favorable Variance means when the Actual cost is less than Budgeted

And Unfavorable Variance means when the Actual cost is more than Budgeted

1

Calculation of actual rate for Variable Manufacturing Overhead (VMO):

Actual rate for VMO = Total Actual Variable Overhead / Actual Units Produced

2

Calculation of budgeted rate for Fixed Manufacturing Overhead (FMO):

Budgeted rate for FMO = Total Budgeted Fixed Overhead / Budgeted Units Produced

3

Favorable Variance means when the Actual cost is less than Budgeted

And Unfavorable Variance means when the Actual cost is more than Budgeted

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